substitute general revenues in the social security trust fund xhsh, which cuts social security. the extension of tax cuts is very bad tax policy and economic policy. it s totally ineffective. if you re extending it for two years under the duress of the situation that conrad explained a few minutes ago, i think the deal is defensible on the whole. professor, as you re wearing your economist hat as opposed to strategic, let s go over a point about the $250,000. that tax was established in 1993. in real dollar terms, $250,000 today working backwards to 93 would you have been $165,000 had that bracket been indexed for inflation as all brackets should be. so the number we re fighting over today, $250,000 is exactly the same number that we fought
joining me is jim kessler, vice president for policy at the third way, and james galbrave professor of government affairs and government at the university of texas. gentlemen, let s listen to what president obama said today about compromise. i have no doubt that everyone will find something in this compromise that they don t like. in fact, there are things in here that i don t like. namely the extension of the tax cuts for the wealthiest americans and the wealthiest estates. these tax cuts will expire in two years, and i m confident that as we make tough choices about bringing our deficit down, as i engage in a conversation with the american people about the hard choices we re going to have to make to secure our future and our children s future
and our grandchildren s future, it will become apparent we cannot afford to extend those tax cuts any longer. as for now, i believe this bipartisan plan is the right thing to do. it s the right thing to do for jobs, it s the right thing to do for the middle class, it is the right thing to do for business and it s the right thing to do for our economy. professor, is the obama plan 2.0, which is now the obama/mcconnell/boehner plan the right thing to do? i think there was a strong case for making the deal, and i think that the terms that the president got were in many respects better than many of us thought would be the case. so broadly speaking i was encouraged by a number of aspects of this deal. i think the cut in payroll taxes, which effectively reduces a major burden on working รง
vice president for policy at the third way, and james galbrave professor of government affairs and government at the university of texas. gentlemen, let s listen to what president obama said today about compromise. i have no doubt that everyone will find something in this compromise that they don t like. in fact, there are things in here that i don t like. namely the extension of the tax cuts for the wealthiest americans and the wealthiest estates. these tax cuts will expire in two years, and i m confident that as we make tough choices about bringing our deficit down, as i engage in a conversation with the american people about the hard choices we re going to have to make to secure our future and our children s future and our grandchildren s future, it will become apparent we cannot afford to extend those tax cuts any longer. as for now, i believe this
fight, but in the end that s probably what you get in december or january or february. professor, why did democrats always feel they are losing the debate whether it comes to taxation? they always adopt some variation on the republican argument, adopting as much of the republican position as they can usually in these debates. why wouldn t the democrats go in for actually much higher tax rates on these high incomes that previously did not exist in the world. incomes of $100 million and $400 million, a billion dollars are taxed at the same rate at $251,000? why did the democrats give up on progress above a very low threshold like $250,000? two reasons. one is franklin roosevelt originally got those very high rates, 91%, on very high incomes as part of a national